Relocating Chinese Carbon

written by: Mark Swilling
on Tuesday, 27 April 2010.
Posted in Footprints Blog

I spent a week in Beijing in November 2009 during which I attended three meetings: a meeting of the International Panel for Sustainable Resource Management, a conference on China’s Green Economy, and as observer at the China Council for Environment and Development.

During these meetings I was able to interact with Chinese experts and officials engaged in one way or another with China’s low carbon and green economy strategies. As I wrote after this visit in the Cape Times and on this blog, China is deadly serious about these strategies not because it suddenly feels committed to preserving the environment, but mainly because these strategies provide the context for innovation-led economic growth and technological modernization. However, there was an oft repeated argument that left me somewhat puzzled but which I have recently begun to figure out.What puzzled me during these meetings is the argument made by Chinese experts and officials that a key strategy for reducing the carbon content of China’s economy was to either close down energy-intensive industries or to move them into other locations. This, they argued, forms part of a wider economic transformation strategy to reduce China’s dependence on secondary industry and increase the importance of the more knowledge-intensive services sector. In other words, emulating China’s sonic industrialization via manufacturing funded from agricultural surpluses, the next phase is another sonic boom – this time emulating what the West has gone through since the 1980s, namely a post-industrial transition driven by information technology funded from manufacturing surpluses. Ok, fine, that part is all understandable even though the whole idea is riddled with all sorts of suspect leaps of logic. It is also understandable that certain industries will be closed, especially the mega-polluters and energy guzzlers. But where will the relocated industries go? Yes, of course, to many countries in East and South East Asia, including countries like the Philippines which has seen massive Chinese investments. So while I am puzzling out the where and how of the relocation of China’s energy intensive industries, I am also tracking the massive acceleration of Chinese investment in Africa. What is interesting about these investments is that they are not the your usual parasitic enclave investments so favoured by Western companies – expats in compounds working on mines or agricultural projects linked to infrastructures to get raw materials out in the quickest and cheapest ways. China is investing heavily in infrastructure – linking Africa’s railway system, roads, harbours, energy, etc. But also, buying into Africa’s financial institutions, in particular South Africa’s Standard Bank with is vast retail infrastructure spread out across Africa (thanks to its ten year buying spree to buy up African banks). Two Newsweek articles over the past few months helped me make the connections between China’s lower carbon strategy be relocating energy intensive industries out of China, and China’s Africa strategy. One was a raving (largely unsubstantiated) article about Africa as the new economic miracle, and the other was an interview with the President of the World Bank. Both made reference to a new World Bank programme to fund the establishment [read:relocation] of Chinese industries in Africa, with special reference made to a project in Ethiopia. Larry Summers, a key economic policy maker in the Obama Administration, some years ago when he was still working at the World Bank made the famous remark that Africa was “under-polluted”. Put this together with World Bank funding for the establishment in Africa of energy-intensive polluting Chinese industries, China’s investments in African infrastructures to get goods into and out of Africa in the most efficient way possible, and China’s grip on Standard Bank’s high speed, Africa-wide financial transaction infrastructure, and you start to see the picture emerge. In short, expect to see Chinese ventures (possibly quite often with a SA partner) to set up manufacturing plants in various parts of Africa where you have limited constraints on pollution, abundant cheap (non-unionised) labour, significant supplies of raw materials, access to Standard Bank’s first world banking system, and local elites who are either easily bribed or are happy to accept a small stake in the business in return for ensuring that all the necessary government approvals are obtained. Mix in your World Bank technocrats, development consultants and academic researchers to make it all look like a ‘development project’ with the usual ‘benefits’ for the poor and the environment, and what you get is yet another example of what development in Africa really means.Can this be contested? Is there another way? Sure there is, but it will have to start with analysis that makes clear what is going, more reporting in the press, and questions from key stakeholders (NGOs, parliamentarians, unions and researchers). Eventually, governments will have to play a key role because they are the ones who eventually grant the approvals and guide decisions. Imagine how much more they could achieve.